Correlation Between Shattuck Labs and Prelude Therapeutics

Can any of the company-specific risk be diversified away by investing in both Shattuck Labs and Prelude Therapeutics at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Shattuck Labs and Prelude Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shattuck Labs and Prelude Therapeutics, you can compare the effects of market volatilities on Shattuck Labs and Prelude Therapeutics and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Shattuck Labs with a short position of Prelude Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shattuck Labs and Prelude Therapeutics.

Diversification Opportunities for Shattuck Labs and Prelude Therapeutics

-0.18

Correlation Coefficient

Shattuck Labs  Prelude Therapeutics

Good diversification

The 3 months correlation between Shattuck and Prelude is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Shattuck Labs and Prelude Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prelude Therapeutics and Shattuck Labs is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Shattuck Labs are associated (or correlated) with Prelude Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prelude Therapeutics has no effect on the direction of Shattuck Labs i.e., Shattuck Labs and Prelude Therapeutics go up and down completely randomly.

Pair Corralation between Shattuck Labs and Prelude Therapeutics

Given the investment horizon of 90 days Shattuck Labs is expected to generate 1.17 times more return on investment than Prelude Therapeutics. However, Shattuck Labs is 1.17 times more volatile than Prelude Therapeutics. It trades about 0.01 of its potential returns per unit of risk. Prelude Therapeutics is currently generating about -0.08 per unit of risk. If you would invest  117.00  in Shattuck Labs on December 30, 2024 and sell it today you would lose (11.00) from holding Shattuck Labs or give up 9.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Shattuck Labs  vs.  Prelude Therapeutics

Shattuck Labs

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shattuck Labs are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Shattuck Labs is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Prelude Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prelude Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Shattuck Labs and Prelude Therapeutics

The main advantage of trading using opposite Shattuck Labs and Prelude Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shattuck Labs position performs unexpectedly, Prelude Therapeutics can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Prelude Therapeutics will offset losses from the drop in Prelude Therapeutics' long position.

The idea behind Shattuck Labs and Prelude Therapeutics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.